Would you pay the same tuition for a Harvard degree as for a second-rate school that you’ve never heard of? Probably not. But thanks to the federal government’s help, that’s exactly what we are all doing. It turns out that many of the biggest beneficiaries of federal loan programs for graduate schools are low quality, for-profit universities that have figured out how to turn federal largesse into nice fat profits.

A new study from the Center for American Progress finds that just 20 universities account for nearly one-fifth of all grad student debt, a total $6.6 billion. What’s perhaps most surprising is who those universities are: 10 of the 20 are for-profit schools, including two foreign schools.

The problem here is that these schools offer terrible value for the money. There’s little debate (except from the schools themselves) that these schools have very low standards for admission. The only requirement seems to be money, and if you don’t have it, they will help you borrow it (often from the federal government). The degrees themselves are barely worth the paper they are printed on, because the reputations of most of these schools are–well, let’s just say they aren’t good. Graduate degrees do improve your career choices, if you get them from a well-regarded institution. But when the school isn’t even ranked in the top 200, a degree isn’t going to open any doors, and it’s certainly not worth borrowing tens of thousands of dollars to get one.

The biggest borrower on the list is Walden University, whose grad students borrowed $756 million last year, according to the CAP report. Walden is owned by Laureate Education, a for-profit education company that hopes to go public next year. This seems to be a profitable enterprise, at least for its CEO. If you’ve never heard of Walden, join the club: it has no academic reputation to speak of. (Don’t confuse Walden University with Walden College, the fictional school made famous in the Doonesbury comic strip. Garry Trudeau did poke fun at Walden U. once, in his August 2012 strip. In that strip, the president of Walden College laments that the graduation rate is so low that “it’s like we’re a for-profit school!”)

Institutions receiving the most graduate student loan disbursements, 2013-14. Source: Center for American Progress analysis of US Dept of Education data.

Institution

Sector

Grad student debt

Rank

Walden Univ

For-profit

$756,336,024

1

Nova Southeastern Univ

Nonprofit

$532,479,305

2

Univ of Phoenix

For-profit

$493,078,509

3

New York U.

Nonprofit

$471,627,155

4

Univ of Southern Calif.

Nonprofit

$460,167,597

5

Capella U.

For-profit

$399,450,066

6

Liberty U.

Nonprofit

$351,847,277

7

Midwestern U.

Nonprofit

$335,146,070

8

Grand Canyon U.

For-profit

$329,153,677

9

Strayer U.

For-profit

$284,209,616

10

For-profit schools are taking advantage of a quirk in the law governing student loads. As Elizabeth Baylor at the Center for American Progress explains, the Higher Education Act allows graduate students to borrow much more than undergrads, up to $50,000 per year. Online, for-profit universities encourage students to borrow far more money by offering graduate degrees (what they call graduate degrees, anyway) rather than bachelor’s degrees.

I’ve heard the argument from the other side: we’re offering education to people who aren’t served by mainstream universities, they say. Well, maybe that used to be true, but no more. Are you a student who just wants to learn a new skill? Today you can get high-quality education for free through Coursera or EdX, which offer courses taught by professors at the country’s top universities, including my own. If you want a certificate of completion for a course, you can get it for as little as $50 at Coursera.

If, on the other other hand, you want a degree to burnish your resume, there are thousands of small (non-profit!) colleges in cities around the country that offer equal or better training, at lower cost, than for-profit universities.

Let me try another comparison. Let’s supposed you wanted to borrow $20,000 to buy a new Mercedes. That seems reasonable, since the car itself is collateral for the loan. Now suppose instead you wanted to borrow the same $20,000, but you’re going to use it to buy an old Yugo, one of the worst cars every made. Why should anyone lend you the money for that? Yet that’s exactly what we’re doing by subsidizing loans for mediocre universities.

Could it get any worse? Well yes, actually: the 7th-largest recipient of graduate student debt, at $352 million, is Liberty University, a school founded by the fundamentalist Christian televangelist Jerry Falwell. This school doesn’t just offer a mediocre education. Instead, they mis-educate by teaching students creationism instead of evolution. They even have a Center for Creation Science to “promote and communicate a robust young-Earth creationist view of Earth history.” This is misinformation masquerading as education.

It’s too bad that for-profit universities continue to draw in students with promises of a better future, only to leave them in debt. But we don’t have to subsidize their practices. Let’s stop offering loans for degrees at online-only and for-profit schools.